CLASSIFICATION OF MEETINGS
There are 3 types of meeting
- The Constituent meeting
- The Annual Meeting (historically known as the Annual General Meeting or AGM)
- Special Meeting of Shareholders (historically known as an Extra-ordinary General Meeting or EGM)
CONSTITUENT ORDINARY MEETING
The final stage in the formation process is the holding of a constituent ordinary meeting.
If the company is not offering it shares to the public the memorandum and articles of association must be authenticated. In addition all the promoters shall participate in signing the memorandum and articles of association either in person or through their authorized agents. A constituent ordinary meeting grouping all the promoters or their nominees and members must be held. This meeting shall appoint not less than 3 and not more than 12 persons to be directors or ratify their appointment by the articles of association; it must also appoint one or more auditors whose function is to watch over the accounts in the interest of shareholders. The acceptance of their office by the directors and auditors marks the birth of the company. But it is still important for the legal validity of that birth that the company shall be entered in the ORG. This is done by filing copies of the articles of association, the minutes of the constituent ordinary meeting and the list of shareholders. Finally the principal documents must be published in the official gazette.
Note that as far as the limited company that does not offer its shares to the public is concerned only some of the procedural requirements examined above is applicable: drawing up of an authenticated articles of association (not draft articles) payment for shares and the holding of a constituent ordinary meeting.
As regards a public limited company that offers its shares to the public, the business of the constituent ordinary meeting, which must be held in the presence of a notary, comprises:
- Verification of the substantive requirements for the formation of the company;
- Adoption of the final text of the memorandum and articles of association, is by special resolution.
- Approval of the evaluation of shares in kind and the benefits given to the promoters which it shall amend by a majority of the votes attached to the shares subscribed by the subscribers present excluding promoters
- Appointment of the organs of administration (directors) and control (auditors) as well as fix their remuneration;
- A vote on the final formation of the company requiring a majority of the votes attached to the shares subscribed by the subscribers present excluding promoters.
The acceptance of their office by the directors and auditors marks the birth of the company. As it is the case with other commercial companies these must be registered in the ORG; the articles of association and minutes of the constituent ordinary meeting and a list of shareholders must also be filed with the registrar of the CIF within whose jurisdiction the company proposes to establish its registered office. Finally the principal documents must be published in the official Gazette.
The promoters are, notwithstanding any clause to the contrary jointly and severally liable towards third parties:
- For the eventual difference between the share capital and the minimum capital as well as that part of the share capital which shall not be validly subscribed, they shall be deem to be the subscribers for that part;
- The effective payment for shares in accordance with the law;
- Liable to pay damages which is the consequence of either the nullity of the company or inaccuracy in the wording of the memorandum of association or overvaluation of any shares in kind or insufficiency of capital;
The Annual Meeting of Shareholders
The Board of directors shall call an annual meeting of shareholders to be held :
- not more than once in each year;
- not later than 6 months after the balance sheet date of the company;
- not later than fifteen (15) months after the previous annual meeting.
A company may not hold its first annual meeting in the calendar year of its incorporation but shall hold that meeting within eighteen (18) months of its incorporation. The company shall hold the meeting on the date on which it is called to be held.
A special meeting of shareholders
A special meeting of shareholders can be called by the Board of Directors or a person who is authorised by the constitution to call the meeting;
Also a special meeting can be called by the Board of Directors on the written request of shareholders holding shares carrying together at least 50 per cent of the voting rights .
NOTICE OF MEETING
A copy of the annual report shall be sent to every shareholder of the company not less than 15 days before the date fixed for holding the annual meeting of the shareholders.
The business to be transacted at an annual meeting shall deal with:
- the consideration and approval of the financial statements;
- the receiving of any auditor’s report;
- the consideration of the annual report;
- the appointment of any directors;
- the appointment of any auditor;
- other issues as may be deemed necessary by the annual meeting.
The business of a special meeting will depend on the reasons given by the diretcors or by the shareholders requesting the meeting.
A Proxy is a person appointed by a shareholder to vote on his or her behalf at shareholders’ meetings either according to instructions or, where specific instructions are not given, as the Proxy sees fit.
A proxy votes carries the same number votes as if the shareholder had attended the meeting in person.
The Articles of Association states the quorum for meetings but where there is no such statement, a quorum is usually taken as 1/ 2 of shares and decisions are taken by a simple majority of those voting.
As regards special meeting the quorum is 1/2 for the first meeting and ¼ for the second meeting. In either case decisions will be taken by ¾ of those voting.
PROCEEDINGS AT THE MEETING
The provisions specified in an order of the Registrar General shall govern the proceedings at meetings of shareholders of a company except to the extent that the constitution of the company provides otherwise.
- . RESOLUTIONS
The powers conferred to the shareholders of a company shall be exercised :
- at a meeting of shareholders;
- by a resolution of shareholders in lieu of a meeting;
- by a unanimous resolution;
- by a unanimous shareholder agreement.
The power conferred to shareholders may be exercised by an ordinary resolution. An ordinary resolution shall be a resolution that is approved by a simple majority of the votes of those shareholders entitled to vote and voting on the matter which is the subject of the resolution. Article 141
Where the shareholders exercise a power to :
- adopt articles of association , if it has , to alter or to revoke them ;
- approve a major transaction;
- approve an amalgamation of the company;
- put the company into liquidation;
Such power shall be exercised by special resolution.
A special resolution shall only be rescinded by a special resolution.
At any general meeting at which a special resolution is passed, the chairperson shall make a declaration as to whether such a resolution is so passed. The special resolution shall be passed upon the majority vote of three quarters (3/4) of shareholders who voted.
An ordinary resolution shall be a resolution that is approved by a simple majority of the votes of those shareholders entitled to vote and voting on the matter which is the subject of the resolution.
A special resolution is a resolution approved by a majority of seventy five per cent (75%) of the votes of those shareholders entitled to vote and who have voted on the issue under consideration. The articles of association may require a majority of more than seventy five per cent (75%);
A unanimous resolution: a resolution which has the assent of every shareholder entitled to vote on the matter.
The minutes of all meetings and resolutions of shareholders within the last ten (10) years shall be kept at Head Office;.